Yankee Doodle Investor

Are our markets fair?

“Spirit of ‘76” by A.M. Willard. Source: Wikipedia

There has been a good amount of discussion about the structure of the stock market. Some have looked at how stock market trades are executed and concluded that our markets are rigged—that powerful insiders use special access to inside information to game the system and profit at the expense of average investors.

It’s true that the stock exchanges are a lot different now than they were 20 years ago, largely in reaction to new technology and new SEC regulations. And some market-makers do try to “scalp” a penny or two off of big trades—buying 1,000 shares of IBM at 165, selling them at 165.01. Do this enough times and you can make some real money.

But there’s good evidence that investing in the market has gotten cheaper. It stands to reason that when market makers compete, consumers benefit. Investment giant Vanguard studied their transaction costs and found that they have declined 60 percent over the past 15 years.

For all their flaws, US markets remain the most open, transparent, and efficient in the world. Our commitment to free markets and free information sets a high standard. The more we can do to get more market information to more people, the better everyone will be. July 4th is about freedom and fairness. Our markets should try to be both.

Douglas Tengdin, CFA

Charter Trust Company

By | 2017-07-17T12:22:43+00:00 July 2nd, 2015|Global Market Update|0 Comments

About the Author:

Mr. Tengdin is the Chief Investment Officer at Charter Trust Company and author of “The Global Market Update”. The audio version of each post can be heard on radio stations throughout New England every weekday. Mr. Tengdin graduated from Dartmouth College, Magna Cum Laude. He received his Master of Arts from Trinity Divinity School, Magna Cum Laude and received his Chartered Financial Analyst (CFA) designation in 1992. Mr. Tengdin has been managing investment portfolios for over 30 years, working for Bank of Boston, State Street Global Advisors, Citibank – Tunisia, and Banknorth Group. Throughout his career, Mr. Tengdin has emphasized helping clients manage their financial risks in difficult environments where they can profit from investing in diverse assets in diverse settings. –
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